Dive Brief:

• President Biden has named Allison Herren Lee, a critic of the Trump administration on auditor independence, fast-track IPOs, gig worker compensation, and other policies that appear to favor business over investor protections, as interim chair of the Securities and Exchange Commission (SEC).
• A former SEC staff attorney who has been a commissioner since mid-2019, Lee will lead the agency until a permanent chair is confirmed. Biden has nominated former Commodity Futures Trading Commission (CTFC) head Gary Gensler, but his confirmation hearing isn’t likely to be held for several weeks. 
• As one of two Democratic votes on the five-person SEC governing board during the previous administration, Lee was often a dissenting voice on deregulatory efforts led by Jay Clayton, who resigned as SEC chair at the end of last year.

Dive Insight:

Lee is a financial regulation and corporate law specialist. She served as senior counsel in the Division of Enforcement's Complex Financial Instruments Unit, among several other roles at the agency.

Outside the SEC, she served as a special assistant U.S. attorney and a member of the American Bar Association’s former Committee on Public Company Disclosure. In private practice, she was an attorney focusing on securities litigation.

As an SEC commissioner, she voted against a change allowing companies to retain their outside auditor even if the auditor is working with affiliates of the company.

The rationale behind the move was to free up SEC oversight staff for cases where conflicts of interest were clear rather than assumed because of multiple relationships the auditor had with affiliated companies. 

Lee argued the change opens the door to weaker oversight, by introducing greater opportunity for error and uncertainty and decreasing visibility into how auditors are making their judgments. 

On IPOs, she took issue with efforts to make it easier for companies to go public outside the traditional process, including through a new primary direct floor listing.

Although she supported increasing IPOs, which, aside from a spike last year, have been trending down as more companies tap big pools of private equity, she called for a more thorough vetting of rule changes to ensure investors aren’t left with inadequate protections if a company runs into trouble. 

When the SEC voted to approve the new primary direct floor listings, which allowed companies to raise capital publicly without having to secure an underwriter, she voted no, saying it could lead to deals going through without adequate due diligence and disclosures.

"The rule fails to address very real concerns regarding protections for investors," she said.

She also took issue with a rule change that allowed companies like Uber and DoorDash, which rely on gig workers using cloud-based platforms to provide services, to offer 15% of worker pay in equity shares. The idea was to give gig workers a stake in the company in lieu of making them employees and offering then benefits. 

Labor advocates blasted the move as a way to boost company profits at the expense of workers. Lee said it favored one kind of business model over others.

"We cannot find any principled basis for the policy choice to single out a specific platform-based business model for a particular competitive advantage," she said.